'Little Marco' Standing his Ground

Stocks in retreat… any bit of uncertainty is enough to cause the algo’s to shoot first and ask questions later……..Senators Rubio (FL) &  Lee (UT) are suddenly undecided about their position on tax reform and it’s all about the child care tax credit - and that is throwing a monkey wrench into the process in the waning minutes of 2017……...’Little Marco’ (Donny’s pet name, not mine) and Senator Lee have been making noise about this issue for a while – when Rubio suddenly stands up and finds his voice – and in that voice he demands further increases in the  refundable portion of the expanded child tax credit (CTC) – a move that means larger benefits for working class families.  In a very frank statement Senator Rubio said

“I want to see the refundable portion of the child tax credit increased.  If it stays at $1,100 I’m a NO”

Side note: When asked about Rubio – Trump has this to say:  “I’m very sure that Senator Rubio will vote to pass tax legislation next week”  (wink, wink)  And next week is also part of the reason that the mkt backed off. You see – investors wanted to see the vote pass by today – which will then give it time to get it to Donny’s desk by Christmas eve…….but if we move into the weekend and next week before a vote is possible – it just further frustrates investors and the mkts and raises the possibility that it doesn’t get done……….

Now at this point – I think it’s all grandstanding – the mkts still expects the bill to pass but the drama will drive the algo’s insane….and in the end – they will take it to the wire – the 11th hr as they say in DC -  and then vote on it which will allow them to get ‘the package’ to the oval office with all the drama on Christmas eve – letting the GOP bask in the sunlight of cooperation and dedication on behalf of the American public….they will pat themselves on the back and talk of how they worked countless hours in the final moments of 2017 to deliver this ‘huge tax reform bill’ to the country……Can you just see Mitchy (McConnell) now?  Let’s hope he has his dentures in…..

So - its’s down to the wire…..the GOP can’t afford to lose a single vote – well they could lose Marco – but not one other….and with Lee & Collins (ME) still on the fence and McCain (AZ) in the hospital – then it raises real concern about the possibility that this bill does not get done in 2017 and as a result – the mkt and investors/traders are showing their displeasure….the Dow lost 76 pts, the S&P gave back 10, Nasdaq lost 20, the Russell Small/Mid Cap retreated by 18 pts and the Transports sank by 71 pts. 

Secondly – it is typical to see the mkt sell off post the FOMC meeting – because the FED isn’t ‘supporting’ the mkts the way they do in the days leading up to and including the meeting dates…(all this to give the impression of stability) – and the fact is that they have now raised rates 4 times in 12 months and the yield curve is getting a bit flatter appearing about ready to invert….- which causes concerns about a coming recession……a flattening/inverting yield curve has been a precursor to the last 7 recessions…so this is not a flash in the pan at all….

Mkt breadth continues to deteriorate but that is hard to see when you have a handful of FAANG stocks and lg cap stocks carrying the load…. this should raise concern that the mkt is tiring and is looking for a reason to back off…and I think you get that reason in January – once the new year begins and any transactions then are not taxable until April 2019 when rates should be lower and the outlook clearer.   A look at the McClennan Adv/Dec line shows that we have broken all supports and while trying to rally back appear to be failing once again and while they may succeed in holding the mkt near the highs thru New Year’s Eve – I think investors should brace for some renewed volatility in the new year. 

Eco data today includes:  Empire State Manufacturing Survey exp of 18. and Industrial Production exp of + 0.3%.    But do not expect the mkt to move on either of these numbers…. I don’t expect that either will surprise in either direction….and if they do – no one will really care……. The bottom line – it’s all about the tax bill and while Rubio has thrown a wrench into it for a day or two – They will deal with him and the package will proceed. 

Overnight we saw strong earnings from ADBE, JBL and ORCL…so that should help the tech sector – but it tech doesn’t respond to those strong numbers – think the FCC decision to reverse the Net Neutrality rules then look for the selling to accelerate.  And today is also a quadruple witching…that is the quarterly expiration of 4 sets of options…it will be marked with outsized volumes both on the open and close and will most likely lead to a dull day between 10 – 3 pm. 

I suspect that we remain in the 2645/2660 range today……

US Futs are up 5 pts – as investors and algo’s recognize that yesterday’s angst is only a distant memory this morning…   

Take Good Care - Have a great weekend....

KP

Filet of Sole

This is also simple to make and is a personal favorite.....For this you need:  Filet of Sole, Eggs, Italian Style Breadcrumbs * (recipe below – these are also the breadcrumbs you use for stuffing the calamari), flour, Olive Oil and tartar sauce.
 
Beat 6 eggs in a large bowl to make an egg wash.
 
Place Flour on a separate plate, place Italian breadcrumbs on a separate plate. - Now make a production line.   Flour - eggs - breadcrumbs.
 
Next - dredge in flour - shake off excess then introduce into the egg wash - remove from the egg wash and place on the plate with the breadcrumbs. Using a fork make sure that you cover the filet in breadcrumbs.  Place on a clean plate.  Repeat until you have breaded all the fish.
 
Next turn the oven to broil and pour olive oil in a pan - maybe like 1/8 inch in pan.   Heat the oil under the broiler.... now be careful and watch - as the oil gets hot you need to make sure that you are ready to broil the filet.  Take a pinch of breadcrumbs and toss in the pan...do they sizzle right away?  If so - then you are ready.  Now place the filets in the hot oil and flip to the other side...now let them broil to a nice golden brown.... Open oven door and with a spatula - carefully flip the filets over to brown the other side.... Once browned - remove and place in a serving platter.   Serve this with tartar sauce and any leftovers make great “fish filet sandwiches the next day!” (Make sure you use toasted Italian bread, melt some provolone cheese - add a bit of tartar sauce).
 
Alternatively – you can cook these on the stove in a frying pan…. but they will have a different taste…in a pinch when making just for you…that’s ok…but if you are making for a group – broiling is easier and faster….
 
 
**Homemade Italian style breadcrumbs -
In a food processor - blend a bag of hamburger rolls (or hot dog rolls) and transfer to a bowl.  Add pepper, onion powder, garlic powder and some parsley for color.  The key ingredient is 3 or 4 handfuls of grated pecorino Romano cheese. Do not add salt...the cheese will make up for any salt you think you need.   Mix well and set aside.
 

  
Buon Appetito.